WEEKLY ENERGY RECAP: Oil demand set to falter till 2022 as virus uncertainty mounts

WEEKLY ENERGY RECAP: Oil demand set to falter till 2022 as virus uncertainty mounts
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Updated 16 August 2020

WEEKLY ENERGY RECAP: Oil demand set to falter till 2022 as virus uncertainty mounts

WEEKLY ENERGY RECAP: Oil demand set to falter till 2022 as virus uncertainty mounts

Crude oil prices remained stable for the third month in a row with Brent crude moving in a tight range between $40 and $45 per barrel since early June. 

Brent advanced to $44.80 per barrel by the end of the week as WTI also gained to $42.01 per barrel.

The big three global oil outlooks published by OPEC, the International Energy Agency and the US Energy Information Administration were all bearish and based on the view that demand may not recover to 2019 levels until 2022 at the earliest.

Transport fuels were seen as especially vulnerable with jet fuel and gasoline the hardest hit by pandemic-related lockdowns.

However OPEC’s latest monthly report suggests that global refining margins may be trending upwards back into positive territory, particularly in Asia.

In general, the sharp downturn in refined petroleum product prices was largely driven by an alarming growth in product inventory levels even as lockdowns eased worldwide.

The IEA reported the steepest downgrades for the second half of this year, driven largely be the continuing weak demand for jet fuel.

More positive signs of recovering demand in the US and Asia should have boosted prices much higher than they have but instead the market remains focused on persistent uncertainties about a continued rise in COVID-19 cases and the potential for a return of lockdowns in the winter. 

The latest OECD data show that commercial oil stocks rose by 24.3 million barrels for the fourth consecutive month to 301.5 million barrels higher than a year earlier and 291.2 million barrels above the latest five-year average. Refined product inventories may remain elevated due to weak public transportation and air transport fuel demand. However the outlook may be more positive for heating oil and naphtha that receive some support from sectors less affected by the pandemic such as home heating and petrochemicals.


Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier. (Shutterstock)
Updated 23 January 2021

Asia to dominate Davos virtual forum as virus-hit West struggles

Asia to dominate Davos virtual forum as virus-hit West struggles
  • Spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday — the opening day of the event

PARIS: Emerging stronger from the COVID-19 pandemic, Asia is set to dominate this year’s virtual World Economic Forum as a virus-battered West struggles and a new US president faces particularly daunting challenges.

The 2020 WEF, which took place in its usual Swiss Alpine resort of Davos, saw the global elite just starting to worry about a pandemic that surfaced in China a month earlier.
While the coronavirus leaves a mounting death toll and upends economies, depriving millions of people of work, China and Asian countries in 2021 are making a strong comeback from the virus that hit them first.
In virtual format because of the pandemic, next week’s event is headlined: “A Crucial Year to Rebuild Trust.”
The spotlight will be on Chinese President Xi Jinping, who will give a speech on Monday, the opening day of the event that will last through next Friday.
The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.
US President Joe Biden will not appear at the virtual Davos, which has never been a fixture on the White House calendar — even if the new administration has pledged to revive a US multilateral foreign policy after four years of Donald Trump’s America First approach.
Trump had been an exception as he stopped in Davos twice, with the real estate billionaire enjoying mixing with the global business elite.
Before him, Bill Clinton was the only American president who had traveled to Davos, and that was just once.
Showing up from Asia are China’s and South Korea’s presidents as well as the prime ministers of India and Japan.
Following the first virtual session, Davos will move in May to Singapore, far from the luxury Swiss ski resort where it has taken place since it was launched in 1971, the brainchild of German professor Klaus Schwab.
The stated reason for the changes is health safety.

FASTFACT

The big names from Europe will be German Chancellor Angela Merkel, French President Emmanuel Macron and European Commission President Ursula von der Leyen, who heads the EU executive.

But a virtual forum is not particularly attractive for the world’s well-heeled movers and shakers, who value huddles behind closed doors in fancy hotels over meetings in formal settings.
French insurance-credit group Euler Hermes said in a study this month that the “world’s economic center of gravity” (WECG) has been moving toward Asia since 2002.
“The COVID-19 crisis could accelerate the shifting global balance toward Asia,” it added.
“By 2030, we forecast the WECG, could be located around the confluence of China, India and Pakistan,” the study projected.
The speech by Xi, who addressed Davos back in 2017, seems almost to set the clock back, as if the business world seeks to erase the Trump era.
Four years ago, he presented himself as the champion of free trade, much to the joy of Davos participants who feared the newly elected Trump’s protectionist moves.
Biden is nevertheless sending John Kerry, the special climate envoy who will be welcomed after the new Democratic president has brought Washington back into the Paris climate accord.
The agenda includes workshops titled: “Stakeholder Capitalism: Building the Future” as well as “Advancing a New Social Contract” and “Resetting Consumption for a Sustainable Future.”
In a column published in mid-January, Schwab said 2021 could be a positive and historic year, 75 years after the original “Year Zero” following the devastation of World War II.
“We once again have a chance to rebuild,” he said, calling for rethinking capitalism in the light of a pandemic that has worsened inequality.
He said “COVID-19 has delivered the final blow” to the post-war model where free markets and limited government produced prosperity and progress that now is “no longer sustainable, environmentally or socially.”